Measuring the cost of making payment decisions

Oz Shy

Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), 2008, vol. 37, issue 6, 2411-2416

Abstract: This short paper proposes a simple method of calibrating for the non-monetary costs associated with using different payment plans. These non-monetary costs often lead consumers to choose a flat-rate subscription plan rather than paying separately for each unit of consumption, despite the fact that the pay-per-use plan turns out to be cheaper ex post. The calibration results hint that these costs are relatively higher for "inexpensive" services than for "expensive" services.

Keywords: Payment; plans; Subscriptions; Flat; rate; Local; measured; service; Pay-per-use; Mental; accounting (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceco:v:37:y:2008:i:6:p:2411-2416

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